Indiana Attorney General Todd Rokita has sued an Indianapolis man and associated businesses involved in schemes to defraud real estate investors – alleging that Herbert Whalen continued to engage in the management of property for investors despite lacking a real estate broker license, as required by law, and hiding prior convictions.
In addition to Whalen, others named as plaintiffs in the lawsuit are MBNS LLC; MBNS Invest LLC; and My Bricks and Sticks LLC (now dissolved).
Rokita
“Our office has made it clear that when you break the law, we will hold you accountable,” Rokita said. “Real estate investors and tenants should be able to trust that their property managers have the knowledge and skills necessary to protect their investments and their homes.”
Requiring property managers to hold valid real estate broker licenses helps ensure that professionals in the field meet basic standards of competence and ethical responsibility.
The lawsuit alleges that Whalen, following a guilty plea relating to a 2018 conspiracy to defraud real estate investors in the Oceanpointe Investments scheme, has continued his illegal activities using a series of LLCs and the fictitious name “Herb Francis.”
The 2018 guilty plea followed Whalen’s perpetrating of a scheme to obtain money from victim real estate investors by misrepresenting and concealing the poor condition of properties he managed as owner of a company called Oceanpointe. As part of the scam, Whalen arranged for investors to purchase dilapidated properties with the promise that after repairs and rehabilitations were completed, and tenants rented the properties, investors would receive copies of the leases and begin to receive rent payments as their return on investment. In reality, many Oceanpointe properties were not repaired and rehabilitated, and were not ready for occupancy. To conceal this fact from victim investors, Whalen and others directed Oceanpointe employees to draft fake leases, making it appear to investors that Oceanpointe properties were rented when, in fact, the properties remained vacant.
Investors have alleged that Whalen used a false name to conceal his identity and used various LLCs to provide property management services. None of the entities created by Whalen and his recently departed wife Natalie Bastin maintain broker licenses.
Whalen’s broker license was revoked in early 2018 by the Indiana Real Estate Commission when he failed to report a series of criminal convictions and for knowingly managing a company without a broker company license.
Attorney General Rokita’s Consumer Protection Division filed this lawsuit through its Homeowner Protection Unit, which exists to protect the rights of all individuals involved in the housing market, including tenants, homeowners, and aspiring homeowners, by investigating and redressing deceptive acts in connection with mortgage lending and violations of relevant state and federal laws.
Rokita expressed gratitude to his team, including Deputy Attorney General Chase Haller, Section Chief for the Homeowner Protection Unit, for their work on this case.
The lawsuit demands a jury trial, costs of prosecution, and other damages against the defendants for multiple violations of the Home Loan Practices Act.
Hoosiers are encouraged to contact the Office of the Indiana Attorney General about any suspected scams or scam attempts. Consumers can file a complaint by visiting indianaconsumer.com or calling 1-800-382-5516.